Asian Stocks Weaken on Stimulus Concerns

Asian stocks were low on Tuesday, declining from record highs, over worries about the Biden administration’s $1.9 trillion stimuli. Concerns about potential roadblocks to the stimulus weighed on sentiment, dragging U.S. Treasury yields to three-weeks lows.

Supporting the dollar against a basket of currencies was the lower risk appetite, while oil prices lowered.

Red was seen across Asian markets. Topping the losers were South Korea and Hong Kong, falling 1.7% each.

Chinese stocks lost 1.5%, and Japan lost 0.6% though all have touched milestone highs this month.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7% to 722.7. However, it was not far off from Monday’s record high, and so this year, it is still up 9%. 

Stock markets in Australia were closed for a national public holiday. S&P 500 e-mini futures fell 0.26%.

In Washington, legislators agreed that getting COVID-19 vaccines to Americans should be a priority. That is even as they locked horns over the size of the pandemic relief package.

Though disagreements have meant months of indecision, financial markets were looking at a massive package. The country suffers more than 175,000 COVID-19 cases a day. Besides, millions are out of work.

The United States, Germany and France’s Q4 gross domestic product data may cool sentiment. GDP data for these countries are due out this week.

Stocks on the Move

Moreover, the Nasdaq index scaled a new peak overnight and added 0.7%. Strong earnings from technology titans were hoped for, later this week. The Dow Jones Industrial Average index, however, struggled to keep pace and fell 0.12%. 

European shares ended at two-week lows. A drop in German business morale highlights the damage from tighter COVID-19 restrictions. 

Furthermore, the Federal Reserve’s Federal Open Market Committee will meet on Tuesday and Wednesday. The U.S. policymakers are to keep the monetary spigot open when the committee meets.

In forex, the dollar advanced to a near one-week high. Volatility in global stock markets sapped investors’ appetite for riskier currencies.

The euro inched lower overnight to $1.2142. It held around those levels in Asia trade.

Benchmark 10-year U.S. Treasury yields remained where they left off in New York at 1.0414%. It hit a three-week low of 1.0300% overnight. 

Brent crude was down 2% to $55.75 after it rose almost 1% on Monday.

Oil held gains near $53 a barrel. More signs of tightening supply offset concerns that a resurgent COVID-19 outbreak and slow vaccine roll-out will blunt near-term demand.